Albion’s Reeve forecasts VCT contraction for 2012

Last year the industry raised £350m, but Mr Reeve he expected fundraisings to amount to roughly £200m-£250m in 2012.

But he said this was not “disastrous”.

“While the VCT market needs roughly £300m of inflows to keep an equilibrium, £200m for 2012 is not a disastrous amount. In fact it is the same as the first year VCTs were launched,” he said.

Within Albion’s VCT range Mr Reeve said there was a focus on healthcare and environment holdings.

“The trick is to go into sectors that are going to be around for a long time,” he said. “Energy is a scarce resource and we need to look at alternatives.

“We are investing a little bit in wind. On current electricity prices wind breaks even or even makes a small profit, then with feed-in tariffs it provides for longer term capital.”

Along with wind, the manager said he was also considering buying hydro-electric power assets, and said he expected to invest roughly £1m-£1.5m in a hydro project in coming months.

Meanwhile Mr Reeve said the government had been right to take its appeal to cut the rates for solar feed-in tariffs - payments made to households and communities that generate green electricity through solar panels - before the official consultation had ended to the High Court, even though it lost last month.

Mr Reeve said Albion did have money invested in solar as part of the group’s eight VCTs.

“The government was absolutely spot on with its call to reduce the feed-in tariff as it was far too high,” he said.

He added that with tariffs coming down from April 1 anyway it may not be necessary for the government to appeal the latest ruling.